Economic evaluation of administration systems in the context of management business processes reengineering

Abstract

The article deals with the peculiarities of an economic evaluation of administrative systems in the context of management business processes reengineering. In particular, methodological approaches to the economic evaluation of such systems are described and characterized. It is concluded that under present conditions most of the projects on construction or improvement of administrative systems belong to the category of investment projects, which, accordingly, are related to investment costs. Consequently, this necessitates the implementation of commonly used in investment management methodical approaches for the economic evaluation of the investments’ efficiency in the administration systems. The main approaches to the economic evaluation of administrative systems in the frameworks of management business processes reengineering are outlined and characterized. They include traditional financial methods, probabilistic methods, qualitative analysis tools, financial, qualitative or combined models, portfolio analysis, budget approach, project approach. Thus, the traditional financial methods of the economic evaluation of the administration systems in the management of enterprises provide for the calculation of the payback period, the net present value, the internal or average rate of return, the profitability index, the level of investments’ return, etc. Among the methods and approaches to solving the problem, the estimated Total Cost of Ownership (TCO), IT Scorecard (consideration of customer projections, finance, processes and training and development in the frameworks of administrative processes in the enterprise and administration systems) on enterprise and administration systems), Activity Based Costing (ABC), Cost/Schedule Control Systems Criteria (C/SCSC), Applied Information Economics (AIE), Total Value of Opportunities (TVO), Total Economic Impact (TEI), Rapid Economic Justification (REJ), etc. The hypothesis about the influence of administrative systems on the resulting indicators of a business entity was confirmed based on the results of calculations. This problem has been solved using correlation-regression analysis. Net income from sales of products (which is known to be one of the most representative absolute indicators of the economic efficiency of production and economic activity of the enterprise) was selected as the resulting (or dependent) variable. Among the independent variables (factor characteristics), the indicators of the level of administrative systems formation (R ) and the level of their stability (R ) were chosen to solve the problem. Appropriate calculations to verify the hypothesis were done for the activities of a number of domestic business entities.